Selling your home can be an exciting time filled with possibilities. Whether you’re moving to a larger home or to a new location, you’re facing the future, hoping to have a little extra cash in the bank from a successful home sale. Unfortunately, most people don’t realize that selling a home can be time-consuming, complicated, and even emotional. While there is no way to guarantee a stress-free sale, avoiding common mistakes saves money during a smooth sales process. If you’re getting ready to sell your home, avoid making these costly mistakes.
1. Underestimating Selling Costs
The cost of selling your home isn’t limited to an agent commission. The home selling process requires you to make sure your house is prepared to become someone else’s new home. It also means taking care of the legal terms that come up in the sale. You can expect the realtor commission to be around 3.8% – 4.6% and closing costs to be 0.5% – 2.8% of the sale price. Here are some sneaky costs that you might not expect.
- Home Inspection Repairs: Many lenders won’t approve a home loan without details from a home inspection. Depending on the seriousness of issues that are revealed, repairs could cost thousands. While you can choose not to make these repairs, you can expect your buyers to negotiate a lower price to buy the home as-is.
- Staging Costs: The cost to stage your home will vary depending on how many rooms you stage and whether you’ll be renting decor.
- Seller Concessions: Instead of negotiating for a lower selling price, buyers might ask for concessions like keeping some of your appliances or you paying all of their closing costs.
2. Skipping Major Repairs
In 2021, home renovations like a new garage door and a kitchen remodel topped the list for renovations to increase home value before a sale. While renovations before a home sale can offer a decent ROI, they should not take the place of important repairs. Most buyers will request a home inspection after you accept their offer. Poor results could delay the closing or even terminate the deal. While you might not completely recoup the costs of major repairs, making the repairs yourself will give you control over who takes care of the repairs and can help you keep costs down.
3. For Sale By Owner
Real estate agents offer a wealth of industry knowledge to earn their sales commission. Your local real estate knows the local market and the value of your home. Experienced agents are experts in what makes homes sell and can point out flaws you need to fix before listing your home. They have extended professional networks to spread the word about a new listing quickly. When it comes time to meet with buyers, a realtor knows what makes a qualified buyer and is skilled in negotiation. They also take care of all the legal paperwork involved in the sale, ensuring you don’t end up in a lawsuit or face other costly issues.
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Selling your home on your own makes you responsible for selling your home’s listing, showing, and legal process. Many buyer’s real estate agents won’t even show an FSBO home, which severely limits your prospective buyer list. Selling your home is one of the biggest financial transactions you’ll make in your lifetime, and FSBO homes sell for $60,000 to $90,000 less than homes sold by a realtor.
4. Not Carrying Proper Insurance
If you still have a mortgage, your lender likely requires you to have a homeowner’s insurance policy. Unfortunately, many homeowners don’t keep this valuable policy after paying off their homes. Besides offering critical protection for your home and possessions in the event of a disaster, your homeowner’s insurance includes liability coverage.
Selling your home means inviting people onto your property. It can also mean your home will be vacant if you’ve already relocated. If a potential buyer has an accident on your property that results in injury, you could end up in a lawsuit. Leaving your home empty can make it more susceptible to vandalism or robbery. Before you list your home, talk to your agent about the sale and make sure your policy is up to date and will provide the coverage you need during the selling process.
5. Not Preparing Your Home for the Sale
Your home is special to you for many reasons, but potential buyers want to envision it as their own. By removing clutter and adding tasteful decoration, you can create more appeal during home showings. Clutter can make your home look smaller than it is. Also, personal items can make it difficult for potential buyers to envision your home as theirs. 31% of seller’s agents said home staging greatly decreased the amount of time a home spent on the market, and 18% said it increased the dollar value of a residence between 6% and 10%. You could lose offers and take considerably longer to sell by failing to prepare your home for showings.
If you don’t have the money to have your home professionally staged, there are still steps you can take to prepare for the sale. Begin by removing photos and other personalized items from your home. Consider renting a storage unit to store belongings you can do without during the sales process. Have a friend or agent look over your home for issues that need to be addressed before selling your home. Then, take care of them. This may include a fresh coat of paint on walls, new lighting, or additional decor.
Frequently Asked Questions About Selling Your Home
Can you sell a house with a mortgage?
Yes. When the loan closes, the escrow agent typically sends the balance of your mortgage to your lender to pay off your mortgage. However, if you’re underwater on the loan, you’ll still have to pay the remainder of the balance.
How much will I make from my home sale?
While many homeowners choose to complete upgrades or repairs before selling, the only required costs of a home sale are typically agent commissions and closing costs. Your closing costs may include transfer taxes, title insurance, escrow fees, attorney fees, and the outstanding amount owed on your mortgage. If you don’t have an outstanding balance on your mortgage, you can expect agent commissions and closing costs to be approximately 7% to 10% of your home sale proceeds
What if I can’t afford to hire a professional to stage my house?
While a professional staging will enhance the appearance of your home for the listing and showings, you can prepare your home for a sale on your own. By removing clutter, adding neutral decor, and making cosmetic repairs, you can show off your home’s best features to potential buyers.
What do I need to disclose when selling my home?
Massachusetts is a caveat emptor state which means it’s the buyer’s responsibility to learn about the property before purchasing. The only things you’re required to disclose before the sale are the presence of lead paint and a septic system. Other upfront disclosures are optional. However, if a buyer asks a question about the home, you’re required to answer truthfully. While you’re not required by law to make disclosures, hiding major home flaws could backfire when the issues are revealed through the home inspection.
What if someone gets injured when viewing my home?
Maintaining an updated homeowner’s insurance policy is an important part of homeownership. It ensures you can recoup the costs of your home and possessions in the event of a disaster and includes liability for injuries on your property. When selling your home, you can expect many visitors (often in your absence). The liability coverage on your homeowner’s insurance will apply for any injuries to others that the homeowner might be found legally responsible for.
Avoid These Mistakes When Selling Your Home
Most homeowners are aware of the dangers of pricing a home too high or refusing to negotiate on a sale price. However, these mistakes are often overlooked and can lead to a longer period on the market and a lower sale price. By preparing for your sale before you list your home, you can look forward to a smoother home sale. To learn more about insurance that will protect you during your Massachusetts home sale, get in touch with the independent agents at LoPriore Insurance today.
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